Estate Planning for Small Business Owners

San Diego Business and Trust Attorney

Small business owners in San Diego should give careful consideration to the survival of their business in the event of a debilitating injury or death. Estate planning for small business owners should establish the legal protections that ensure their ownership interest will be protected and passed on to heirs and beneficiaries with the minimum amount of taxation and challenges.

The experienced business and estate planning attorneys at Allen Barron have broad tax experience. They will work to ensure that the distribution of your ownership interests to your heirs is done in a tax advantageous and simplified manner in accordance with your wishes, providing financial security for your family and loved ones.  Unfortunately, many small business owners do not have an estate plan, or have only a simple will.  This will result in their business and assets being tied up in probate court, an expensive process that can take many months or even years.  These delays will likely impact the management and performance of your company, causing a loss of business and a reduction in the performance and value of your company.

Operating Agreement and Buy-Sell Agreement

When the small business has more than one owner, your estate plan should ensure that corporate documents are well crafted and are consistently updated to reflect changes in federal and state laws, as well as the life circumstances of the owners of the business. In a limited liability company, the “Operating Agreement” should anticipate many of the potential life challenges the owners may face including:

  • Incapacity
  • Death
  • Divorce
  • Personal Bankruptcy

These contingency plans provide specific strategies for how the business will survive these major life occurrences, valuation procedures for ownership interests, and options available to surviving owners to protect the life of your company while providing a fair value for the affected partner. These strategies might include a buy-sell agreement – a contract that governs the transaction of the ownership interest between remaining partners, and the process for determining the value to be paid for the departing owner’s share(s).

The Use of a Trust for Business Estate Planning

Allen Barron’s estate planning attorneys will review the advantages of placing your business ownership and other assets within a “trust.” A trust is simply a legal entity that provides maximum control over the assets while providing both privacy and limited, if any, court supervision, over the transfer and distribution of the assets. Your trust provides privacy for your financial affairs, and should contain specific instructions for how the assets should be distributed upon your passing.

A “pour-over” will is often deployed to ensure that all assets, accounts or possessions are protected, included in your trust and ultimately distributed per the instructions contained within the trust documentation. We protect every aspect of your business and personal assets so that you know the business will survive almost any event that should arise, and that your family has the greatest opportunity to benefit from all of the hard work you have poured into your company.

Contact Experienced Small Business Estate Planning Attorneys

Estate planning for small business owners is an important component of business ownership.  Allen Barron’s experienced estate planning attorneys ensure that your business and assets are preserved, and that your family has a clear understanding of what to do and how to move forward. We help to organize all important contact information, key employee designations, and your directions for how affairs are to be managed.

It doesn’t matter if your small business is a sole proprietorship, a Limited Liability Corporation or LLC, an S-Corporation, C-Corporation or a Professional Corporation. There are important tax, estate planning and legal issues to be addressed to ensure that your assets are protected and that you have the peace of mind of knowing that your family is provided for and your business will survive and prosper. We invite you to contact us or call for a free and substantive consultation at 866-631-3470. Learn about the business, estate planning and tax issues associated with small business ownership, and the steps you can take to protect your family and your company.